B.C. Foreign Buying Tax May Contravene NAFTA

VICTORIA — A Canadian trade expert says British Columbia's new 15 per cent property transfer tax on foreign homebuyers could spark trade wars with China and the United States.

Trade lawyer Barry Appleton says the B.C. legislation is likely to face lawsuits from those who allege it violates the North American Free Trade Agreement (NAFTA) because it discriminates against investors based on their nationalities.

Appleton says China could also object to the tax largely geared towards Chinese citizens on grounds it could spur further tax and tariff actions on Canada's part.

However, trade economist Keith Head, at University of B.C.'s Sauder School of Business, says he's not convinced the property transfer tax will ignite international reactions.

He says most NAFTA disputes involve companies and not individuals and the Chinese government may take an ambivalent approach to the tax because it could actually help in its efforts to keep money within its borders.

Premier Christy Clark has said the government consulted legal experts and is convinced the law can withstand legal challenges.